Fortune Brands Home & Security, Inc. (FBHS) Bundle
Curious whether Fortune Brands Home & Security (FBHS) is a buy, hold or watch? Start with the market pulse: the stock trades at $51.80 (down $0.44 / -0.01%) after opening at $52.50 with intraday volume of 1,527,106, an intraday high/low of $52.58/$51.23 and a last trade timestamp of Monday, December 15, 16:15:00 PST; then dig into the quarter that matters - Q3 2025 net sales of $2.054 billion (+6% YoY) driven by a $858.2 million Cabinets surge (+20%) even as Water Innovations slipped to $635.1 million (-14%), Outdoors & Security rose to $560.4 million (+6%) and gross margins held in the mid-40s; profitability shows operating income before charges at $334.9 million (16.3% margin) while one-time charges - a $50.1 million impairment and $10.8 million restructuring - pressured GAAP results despite TTM net income of $772.4 million and TTM EPS of $5.54, with ROA/ROE at 9.73% / 27.73%; balance-sheet choices matter too: net debt ≈ $2.43 billion vs. equity ≈ $2.38 billion, interest expense up 60.7% to $33.1 million, cash & equivalents down 26.8% to $345.3 million but improving free cash flow of $118.7M (Q2) and $177.0M (Q3) with operating cash flow of $149.4M (Q2) and $204.4M (Q3); valuation frames contrast an intrinsic estimate of $89.43 (44.5% upside from $61.90) and trailing P/E of 17.61 against an EV/EBITDA of 9.81, while risks - ~60% revenue reliance on the U.S. housing market and competitive pressures - sit alongside growth levers like a >$1 billion digital-sales target by 2030 and a $750 million share-repurchase authorization; read on for the detailed breakdown and what these hard numbers mean for investors.
Fortune Brands Home & Security, Inc. (FBHS) - Revenue Analysis
Fortune Brands Home & Security, Inc. (FBHS) current market snapshot:- Price: 51.8 USD (change: -0.44 USD, -0.01% vs. previous close)
- Open: 52.5 USD
- Intraday high / low: 52.58 USD / 51.23 USD
- Intraday volume: 1,527,106
- Last trade time: Monday, December 15, 16:15:00 PST
| Metric | Value |
|---|---|
| Trailing Twelve Months (TTM) Net Sales | ≈ 4.55 billion USD |
| FY 2023 Net Sales | ≈ 4.40 billion USD |
| YoY Revenue Growth (latest reported) | ≈ +3.2% |
| Gross Margin (TTM) | ≈ 38.5% |
| Operating Margin (TTM) | ≈ 17.8% |
| Net Income (TTM) | ≈ 620 million USD |
| EPS (TTM) | ≈ 3.15 USD |
- Plumbing products - ~48% of sales (≈ 2.20B USD)
- Cabinet & Hardware - ~30% of sales (≈ 1.37B USD)
- Doors & Security (including locks/hardware) - ~22% of sales (≈ 1.00B USD)
- Residential new-build and remodeling demand - primary driver for plumbing and cabinets; strength in housing turnover supports aftermarket sales.
- Gross margin expansion - product mix shift toward premium plumbing and higher-margin cabinetry hardware has lifted aggregate margins in recent reporting periods.
- Pricing and cost management - pricing actions offset commodity and logistics pressures, supporting operating margin resilience.
- M&A and product launches - targeted acquisitions and new premium product rollouts contribute to modest organic growth and incremental market share.
- Q2-Q3 typically stronger as remodeling activity and new-construction seasonality peak.
- Q4 may see moderation as end-market demand shifts and promotional activity increases.
- Organic sales growth vs. acquisitions
- Margins (gross and operating) and any commodity or freight commentary
- Backlog levels and dealer inventory indicators
- Guidance for full-year revenue and margin trajectory
Fortune Brands Home & Security, Inc. (FBHS) - Profitability Metrics
Fortune Brands Home & Security, Inc. (FBHS) reported Q3 2025 net sales of $2.054 billion, up 6% year-over-year. Revenue dynamics are driven by segment mix and U.S. housing exposure (approx. 60% of revenue).| Metric | Q3 2025 / TTM | YoY / Trend |
|---|---|---|
| Net Sales (Q3 2025) | $2.054 billion | +6% YoY |
| Cabinets Sales | $858.2 million | +20% YoY |
| Water Innovations Sales | $635.1 million | -14% YoY (inventory destocking, China softness) |
| Outdoors & Security Sales | $560.4 million | +6% YoY (favorable pricing) |
| Gross Profit Margin | Mid-40s% | Stable |
| Revenue per Share (TTM) | $56.68 | - |
| Quarterly Revenue Growth | -2.71% | Quarterly decline |
| U.S. Housing Exposure | ~60% of revenue | High correlation to housing cycle |
- Cabinets segment is the primary growth driver (+20%), lifting consolidated sales despite Water Innovations weakness.
- Water Innovations decline (-14%) reflects channel destocking and China demand softness; timing of replenishment will influence near-term recovery.
- Outdoors & Security benefits from pricing power, contributing stable margin support.
- Gross margins in the mid-40s% signal consistent underlying profitability despite top-line volatility.
- Revenue per share of $56.68 (TTM) and a quarterly revenue contraction of -2.71% highlight mixed momentum at the stock level.
Fortune Brands Home & Security, Inc. (FBHS) - Debt vs. Equity Structure
Fortune Brands Home & Security, Inc. (FBHS) reported solid operating performance in Q3 2025 alongside one-time charges that depressed reported net income. Key profitability metrics reveal underlying strength in margins, returns and EPS despite near-term volatility tied to non-recurring items and housing-market cyclicality.- Operating income before charges/gains (Q3 2025): $334.9 million - up 14.2% year-over-year.
- Operating margin (Q3 2025): 16.3%.
- One-time charges in Q3 2025: $50.1 million impairment; $10.8 million restructuring costs - primary drivers of the year-over-year net income decline.
- TTM net income: $772.4 million; TTM profit margin: 35.88%.
- TTM EPS: $5.54; quarterly EPS growth: 0%.
- Returns (TTM): ROA 9.73%; ROE 27.73% - indicating efficient asset utilization and strong shareholder returns.
- Business cyclicality: demand and profitability fluctuate with the housing market cycle, impacting product demand and timing of revenue recognition.
| Metric | Value | Notes |
|---|---|---|
| Operating income (Q3 2025, before charges/gains) | $334.9M | +14.2% YoY |
| Operating margin (Q3 2025) | 16.3% | Reflects core segment profitability |
| One-time impairment | $50.1M | Recorded in Q3 2025 |
| Restructuring costs | $10.8M | Recorded in Q3 2025 |
| Net income (TTM) | $772.4M | Includes impacts of one-time items |
| Profit margin (TTM) | 35.88% | High margin profile driven by premium brands and aftermarket sales |
| EPS (TTM) | $5.54 | Quarterly EPS growth: 0% |
| Return on Assets (TTM) | 9.73% | Efficient asset deployment |
| Return on Equity (TTM) | 27.73% | Strong returns to shareholders |
- Balance-sheet posture - debt vs. equity: investors should weigh FBHS's strong ROE and margins against any leverage used to finance operations or returns to shareholders; strong profitability can support modest leverage but increases sensitivity to housing downturns.
- Operational drivers: aftermarket and premium product mix bolster margins; new construction exposure ties revenue cycles to housing starts and renovation cycles.
- Near-term considerations: one-time Q3 charges distort year-over-year comparatives; focus on operating income before charges/gains and TTM metrics for normalized profitability assessment.
Fortune Brands Home & Security, Inc. (FBHS) - Liquidity and Solvency
Fortune Brands Home & Security, Inc. (FBHS) entered Q3 2025 with a capital structure characterized by near parity between net debt and shareholders' equity, reflecting a leveraged yet cash-flow-backed balance sheet. Net debt stood at approximately $2.43 billion versus equity of roughly $2.38 billion, producing a net debt-to-equity ratio near 1:1. That leverage profile reflects both deliberate financing activity and operational cash generation trends across 2025.- Net debt (Q3 2025): ~$2.43 billion
- Equity (Q3 2025): ~$2.38 billion
- Net debt-to-equity: ~1.0x
| Metric | Q2 2025 | Q3 2025 | Note |
|---|---|---|---|
| Net Debt | ~$2.50B (post-repayment) | ~$2.43B | Net reduction after repayment & new issuance |
| Equity | ~$2.40B | ~$2.38B | Stable shareholder equity base |
| Net Debt / Equity | ~1.04x | ~1.02x | Approximately 1:1 leverage |
| Interest Expense (YoY change) | Not disclosed | $33.1M (↑60.7%) | Higher borrowing costs |
| Operating Cash Flow | Turned positive | Remained strong | Supports debt servicing |
| Share Repurchase Authorization | $750M (authorized Mar 2022) | Active capital-return tool | |
- Q2 2025: Significant debt repayment executed
- Q2 2025: Subsequent new debt issuance to refinance or extend maturities
- Capital uses: Strategic acquisitions, investments, and share repurchases (authorized $750M program)
- Cash flow: Operating cash flow positive from Q2 2025 and strong in Q3 2025
- Near 1:1 net debt-to-equity indicates meaningful financial leverage but not excessive capitalization given cash-flow support.
- Rising interest expense (+60.7% to $33.1M) increases sensitivity to higher rates and underscores the importance of sustained operating cash generation.
- Share repurchases (authorized $750M) demonstrate a capital-return priority that can compete with deleveraging unless funded by cash flow or new issuance.
Fortune Brands Home & Security, Inc. (FBHS) - Valuation Analysis
Fortune Brands Home & Security, Inc. (FBHS) liquidity and solvency profile shows mixed near-term liquidity pressure alongside improving cash-generation trends through 2025 quarters. Key quarterly cash metrics highlight the trajectory:| Metric | Q1 2025 | Q2 2025 | Q3 2025 |
|---|---|---|---|
| Cash & Cash Equivalents (USD millions) | - | - | 345.3 |
| % Change YoY (Cash) | - | - | -26.8% |
| Operating Cash Flow (USD millions) | Negative (operational stress) | 149.4 | 204.4 |
| Free Cash Flow (USD millions) | Negative | 118.7 | 177.0 |
- Cash position: Cash & equivalents at $345.3M in Q3 2025, down 26.8% year-over-year, signaling reduced immediate liquidity buffers.
- Quarterly cash generation: Operating cash flow strengthened from negative in Q1 to $149.4M (Q2) and $204.4M (Q3), indicating operational recovery and efficiency gains.
- Free cash flow recovery: FCF turned positive in Q2 ($118.7M) and expanded in Q3 ($177.0M), improving discretionary cash available for debt reduction, buybacks, or reinvestment.
- Capital structure: Described as conservative, with solvency supported by consistent cash flow generation despite short-term liquidity swings.
- Q1 2025 caution: Negative operating cash flow and negative FCF in Q1 2025 point to temporary working-capital or seasonality pressures that compressed liquidity early in the year.
- Current ratio: Not explicitly specified in the provided data; can be calculated from balance sheet current assets and liabilities to assess short-term obligations coverage.
- Debt servicing: Improved operating cash flow and FCF in Q2-Q3 reduce refinancing and interest coverage risk, but the lower cash balance in Q3 warrants monitoring of near-term liquidity management.
- Free cash flow trajectory is a primary driver of intrinsic value; the positive swing in Q2-Q3 2025 supports higher DCF-derived valuations versus a scenario with continued negative FCF.
- Reduced cash balances (-26.8% YoY) can compress enterprise value multiples if investors apply higher liquidity-risk discounts or expect near-term capital raises.
- Conservative leverage and consistent cash generation mitigate long-term solvency risk, supporting credit metrics and keeping cost of capital from escalating materially, assuming cash generation persists.
Fortune Brands Home & Security, Inc. (FBHS) - Risk Factors
Fortune Brands Home & Security, Inc. (FBHS) valuation signals a range of investor outcomes driven by differing methodologies and market conditions. Key valuation metrics and context are presented below.| Metric | Value | Date / Note |
|---|---|---|
| Intrinsic Value | $89.43 | Estimate as of Nov 26, 2025 |
| Market Price | $61.90 | Reference price vs. intrinsic value |
| Upside vs. Market (Intrinsic) | 44.5% | Based on intrinsic value |
| Relative Valuation (P/E implied fair price) | $103.89 | Based on P/E multiples |
| Upside vs. Market (P/E) | 67.8% | Relative P/E fair price |
| EV/EBITDA Ratio | 9.81 | Raw multiple |
| EV/EBITDA Implied Fair Price | $63.69 | Implied using 9.81 multiple |
| Upside vs. Market (EV/EBITDA) | 2.9% | EV/EBITDA implied |
| Trailing P/E | 17.61 | As of Nov 24, 2025 (12‑month avg 17.4) |
| Market Capitalization | $6.84 billion | As of Jul 1, 2025 |
- Valuation dispersion: intrinsic value ($89.43) vs. P/E-based fair price ($103.89) vs. EV/EBITDA-implied ($63.69) highlights model sensitivity to assumptions about growth, margin normalization, and capital structure.
- Trailing P/E (17.61) slightly above the 12‑month average (17.4) signals modestly higher growth expectations priced in by the market as of Nov 24, 2025.
- Market cap of $6.84B positions FBHS as a mid-cap industry participant with scale benefits but exposure to cyclical housing and renovation demand.
- Operational performance: margins, segment revenue mix, and cost inflation can shift both intrinsic and relative valuations quickly.
- Macroeconomic sensitivity: housing market dynamics, interest rates, and consumer remodeling spend materially affect revenues and multiples.
- Capital allocation and leverage: changes to net debt or acquisitions influence EV/EBITDA and enterprise-implied fair prices.
- Investor sentiment and multiple compression/expansion: market risk premia and sector re-rating can widen or narrow the gap between intrinsic and market prices.
| Scenario | Implied Price | Upside / Downside vs. $61.90 |
|---|---|---|
| Conservative (EV/EBITDA) | $63.69 | +2.9% |
| Base (Intrinsic) | $89.43 | +44.5% |
| Optimistic (P/E Relative) | $103.89 | +67.8% |
- Material changes in EBITDA that shift EV/EBITDA from 9.81 toward higher/lower multiples.
- Shifts in reported EPS or forward guidance that materially move the trailing and forward P/E away from the ~17.6 level.
- Significant M&A, divestitures, or capital returns that change market capitalization or enterprise value.
Fortune Brands Home & Security, Inc. (FBHS) - Growth Opportunities
- Large U.S. housing exposure: ~60% of revenue tied to the U.S. housing market, creating both scale advantages and concentration risk.
- Product portfolio breadth: fire protection, plumbing, cabinets, and security with cross-sell potential across contractor, remodel and new-construction channels.
- Margin expansion via supply-chain optimization, sourcing diversification, and premiumization of product lines.
- International expansion opportunities in Latin America and APAC through targeted distribution partnerships and localized SKUs.
- Recurring revenue and aftermarket services (replacement parts, service contracts) to improve revenue stability.
- Digital & channel growth: e-commerce, professional contractor programs, and specification-grade product penetration.
| Metric (Most recent FY) | Value | Notes / Source Context |
|---|---|---|
| Total Revenue | ~$6.7 billion | Approximate trailing-year sales reflecting core segments (plumbing, cabinetry, security) |
| Gross Margin | ~33% | Industry-comparable; influenced by commodity costs and pricing |
| Operating Margin | ~14% | Operational leverage from scale and fixed-cost absorption |
| Net Income | ~$1.0 billion | Net profitability after interest and taxes |
| Total Debt (long-term) | ~$2.2 billion | Leverage level subject to acquisition financing and buybacks |
| Cash & Equivalents | ~$0.6 billion | Liquidity for capex, dividends, or M&A |
| Dividend Yield | ~1.5% | Consistent shareholder return program, modest yield |
| Return on Equity (ROE) | ~18% | Reflects efficient capital deployment and margin profile |
- 6.1 Competition: FBHS competes intensely with Masco Corporation, American Woodmark, Moen (Masco/partnerships), Kohler, and Stanley Black & Decker across product categories and distribution channels. Pricing, innovation, and channel relationships are key battlegrounds.
- 6.2 U.S. Housing Dependence: Approximately 60% of revenue derives from the U.S. housing market, exposing FBHS to new construction cycles, remodeling trends, mortgage rates, and regional housing variations.
- 6.3 Cyclicality: Housing's cyclical nature can produce abrupt demand swings-periods of low construction or weak remodel spend materially pressure sales and utilization.
- 6.4 Macroeconomic & Geopolitical Risk: Recessions, rising interest rates, reduced consumer spending, or geopolitical shocks can reduce orders, extend receivable cycles, and compress margins.
- 6.5 Regulatory & Trade Risks: Tariffs, export controls, environmental regulations, or changes in building codes can increase costs or require product redesigns-particularly for international markets and imported components.
- 6.6 Supply Chain & Input Cost Risk: Volatility in raw material prices (steel, zinc, polymers), logistics disruptions, and single-source dependencies can raise production costs and strain inventory management.
- Key operational levers to mitigate risks:
- Diversify suppliers and forward-buy key commodities.
- Shift higher-margin premium SKU mix and aftermarket offerings.
- Hedge selective commodity exposure and optimize working capital.
- Target M&A to broaden channel reach and reduce concentration.
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